Labour costs rise is "heaviest burden" on Polish construction

A new report by Polish construction market research group Spectis has described business confidence among the sector as having "tumbled" early this year. According to Spectis, the "heaviest burden, as perceived by construction companies" is the sharp rise in labour costs and increased taxation.  

"This practically means that the times of low-budget construction are over for good, and 2020 will be marked by rising labour costs," said Spectis in a press release.

In 2019, the Polish government, following reelection by the Law and Justice Party, introduced a sharp rise of as much as 15% in the national minimum wage, and a 10% hike in social insurance contributions from employers. These measures placed a higher burden on smaller construction firms and sole traders. Larger construction companies are now required to conduct either Employee Capital Schemes (PPK) or Employee Pensions Schemes (PPE).

The Spectis report “Construction market in Poland – February 2020” found that the wage hike, which came into force last month, had impacted smaller and medium construction firms hardest because they were the ones that tended to pay workers the minimum wage. Larger companies, with 250 employees or more, usually paid more than the legal minimum. Nonetheless, Spectis found that there would still be an indirect impact of larger firms, which often hire subcontractors, who will raise their prices. 

The report also said the Polish construction industry was anticipating "mounting pay pressures from Ukrainian labourers". There is a large number of immigrant construction workers from Ukraine in Poland, brought in as the country's native workers took up better paid work in Germany and the UK. Spectis said the sector is concerned that the Ukrainian workers will find more lucrative work in other countries, specifically Germany, or even back in the Ukraine which has recently witnessed an economic upturn and rapid growth in wages.

The report's author also warned that average Polish citizens would be impacted by the rise in wages if they wanted to fit out new homes or renovate existing ones - services usually provided by a sole trader. Poland has more than 300,000 self-employed builders and construction workers and it is likely the 10% increase in social insurance contributions will be an expense that is passed on to the consumer.

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